A recent case involving insurance sales brokers clarifies some of the issues surrounding the termination of independent contractor agreements and ownership of the individual agent’s book of business.
The Ontario Appeals Court upheld the original judge’s decision in a case that involved two defendants. Both began working as sales agents for a small insurance brokerage within a year of each other. One came into the job with an established clientele while the other did not. The latter verbally agreed to split the market value of any existing business at the termination of their contract on a 50/50 basis with the brokerage. The more experienced agent with an existing book of business did not enter into any such agreement, even though it was a known company policy.
After resigning without notice at the same time, both sales agents began working for a competing brokerage, soliciting their existing clients. The original brokerage sued both of them for breach of contract along with other charges.
Get It In Writing
Both the original and appellate judges found that the inexperienced sales agent who’d agreed verbally to split the value of his existing business was bound by that agreement. Conversely, they also found that the agent who’d been hired with his own book of business was entitled to keep it and benefit from its use without compensating his former brokerage.
In fact, on two other charges, the Appeals Court upheld penalties against the agent who had a verbal agreement on splitting the book with the brokerage, but absolved the other agent of all wrongdoing.
- In other words, without an agreement to the contrary, an independent contractor is the sole owner of his or her book of business.
Two vastly different outcomes that starkly illustrate the consequences of having – and not having – employment agreements in writing. It’s doubtful that it was the company’s intent to produce such disparate results. No one wants to be in a situation where they don’t know what’s going to happen when a contract is terminated, or in the event of any other contractual situation that may arise. It doesn’t benefit either the contractor or the independent agent.
Prevention is the Best Remedy
Our experienced breach of contract lawyers can advise you on how to negotiate any aspect of your all-important employment contract and advise you on the implications and potential implications of every clause.
Before you sign on the dotted line – if you’re in the process or thinking of entering into an employment contract, then contact our experienced breach of contract lawyers for advice. Clarity on the issues covered by a contract is your key to understanding your rights.
An employment contract should work both ways. The employer’s interests should be covered – but yours should be too. If you feel your employer has neglected to follow through on their side of the obligations in any way, you owe it to yourself to get the best advice.
You only have a limited time to take action in a breach of contract case. If you think your rights under a contractual agreement are being disregarded contact Petrillo Law today for a free consultation with an experienced contract lawyer. We look forward to hearing from you.
Get the Legal Representation You Need
Know your rights. Contact the breach of contract and disability lawyers at Petrillo Law today by calling (905) 949-9433. We look forward to hearing from you.